Do You Have A Close Relationship With Your Credit Card?
By Gustan Cho
Have both of you been inseparable through each daily transaction. Are you paying off your monthly balance on time? You probably know all of your card’s important details, like its credit limit, interest rate and your probably have memorized every reward and benefit. You know your card number by heart so all of this detail between you and your card is great but, unfortunately, there’s some bad news that could be financially heartbreaking. Your credit card company may be holding out on you!
Credit Card Companies
The fact is you’ve been kept in the dark about several secrets because your financial benefit comes at your card issuer’s financial loss. Here are a few things that your carrier doesn’t want you to know.
Fixed rates aren’t really fixed. Issuers can raise your APR whenever they choose. This information isn’t necessarily a blatant secret, but it’ll be hidden so deeply in the fine print of your cardholder’s agreement that card companies are hoping you miss it.
One late payment, two penalties. In a perfect world, one late payment equals one penalty fee; on-time payments equal zero fees. In this imperfect world, you can be penalized with two surcharges on one delinquency, and you won’t know about them until you’ve been charged.
Twice the interest in one month? Another one-two financial punch comes in the form of a legal maneuver which allows your card company to impose two months’ interest for just one month of late balance payments.
Disgraceful grace periods. How many of us who’ve made big-ticket purchases have been thankful for the grace period? Say you charge $1,000 to your card and pay $250 by the due date to hold over your creditors. Most cards carry grace periods up to about 25 days, allowing you to pay off the remainder, interest-free. But in the spirit of profiteering, many providers are reducing the grace period to just 20 days, while some are doing away with them altogether.
No card limits – just with limits. Many consumers in possession of a no-limit charge card discover they have a revolving spending cap. Let’s use $3,000 – but only learn of it after racking up $5,000 in purchases. This leaves you stuck with a remaining $2,000, plus interest, to pay off. Why is this so? Your card company advertised your plastic as no limits, but it’s really set at a no preset limit.
Minimum payments to the maximum. It’s the nature of the credit beast. The longer you stay in debt, the more interest credit card companies can charge, and the more money they make.
Late payments to any creditor can raise your APR. We hope that our creditors aren’t wishing us to slip up on our repayments, but if there’s one thing to take away from this article, it’s to be on time paying down your debt. A partial payment, be it your credit card, car or mortgage payment, can jack up your total APR across each line of credit in your name.